Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Hansard source

I am pleased to stand at the dispatch box and to follow the previous speaker to talk about the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016. I want to look at it from a number of perspectives. Firstly, what exactly the government is doing here, what they say it will do and then whether or not it will work.

I will say to the previous speaker that in addressing this bill I am actually dealing with the 10 years that are covered in the explanatory memorandum and the 10 years that were covered in the Treasurer's budget announcement last year when he got up and announced this as a 10-year plan, giving tax cuts across the range of businesses, including right up to businesses with a turnover in excess of $1 billion. That is actually in the explanatory memorandum; we are not making it up. The other side do not get to backtrack and say, 'No, it's really just one year,' because really it is not. The Treasurer stood up here and talked about a 10-year plan. So let's look at what that 10-year plan is.

In 2016 the company tax rate will be cut from 28.5 per cent to 27.5 per cent for companies with an aggregated turnover of less than $10 million. The turnover of $10 million will be progressively lifted over the period to 2022-23, with the effect that companies with a turnover of $1 billion or more will be eligible at that time for the lower 27.5 per cent tax rate. And then in 2023-24, the threshold will be removed so that all companies will be subject to the 27.5 per cent tax rate. And then it will be reduced from there it to 25 per cent over the next couple of years to 2026-27. That is in the Bills Digestit is in the explanatory memorandum. That is what we know from the Treasurer's budget speech. That is actually what they are doing.

So, by 2022-23 we will see a turnover threshold of $1 billion and then after that we will see that threshold removed altogether and the tax rate go down. Examples of companies that will affected by that in the mid years are, in the $25 to $50 million turnover range, Broncos, for example, and in the $100 million to $250 million we see Baby Bunting, Cabcharge, Hansen Technologies and Capilano Honey. Then when we get to the big end-plus, we see the banks, Wesfarmers, Woolworths, Qantas, Aristocrat Leisure et cetera—very big companies that will be enjoying the benefits of this 10-year tax plan, in the government's own words.

Now, the cost of this is quite interesting: over the 10 years it is $48.2 billion on the ramp-up to its final year, and $8 billion a year after that. It is also estimated that because the government, in spite of all of its rhetoric about paying off the debt, has actually doubled the deficit we are actually talking about $4 billion in interest during that ramp-up period as well. It is an incredibly expensive piece of policy, announced as the centrepiece of the policy, the single thing this government had that was going to drive jobs and growth—the single thing. This was it; this was the policy.

The question about jobs and growth is really interesting. It is really important, because we are not in a very good position at the moment. Company profits have surged; that is a good thing. They have surged to a record high, but at the same time wages have suffered their sharpest decline in eight years—new figures are out now—at the very time that the Turnbull government are talking about a $48.2 billion tax cut for businesses across the full spectrum over a 10-year period. The Turnbull government say that if you give businesses a tax cut they will employ more people. They say that if you give big business a tax cut, investment will go up. In spite of the previous speaker's argument, this is trickle-down economics. It is trickle-down economics to say that if you give the biggest businesses a tax cut they will employ more people. Absolutely basic, trickle-down economics is what we are seeing here. I have heard Scott Morrison talk about this—give big business a tax cut, give big business more money, it trickles down. I am going to quote another well-known economist, Will Rogers, who is roughly on the same level as Scott Morrison, our Treasurer. He was around a little bit earlier, but was a really interesting man—someone from the cowboy days. This is from 1932:

The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow.

So even Will Rogers, back in 1932, got that essentially right. If you give money to the biggest businesses, they do not necessarily employ more people. In fact, the Treasury modelling itself shows that. It shows that over 20 to 30 years we might see a 0.1 per cent increase in jobs. That is the Treasury modelling. So we are seeing a $48.2 billion tax cut with, in 20 to 30 years, an improvement in the job market of less than 0.1 per cent. It is not exactly a good demonstration of how trickle-down actually works—not at all.

They also say that if you give big business a tax cut then foreign investment will increase, and this also is a rather questionable assumption. The analysis by the Australia Institute found that 97 per cent of the applications to Australia's Foreign Investment Review Board—

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